HOUSTON, Aug. 15, 2005 (PRIMEZONE) -- SYSCO Corporation (NYSE:SYY), North America's leading foodservice marketer and distributor, today announced sales and earnings results for the 13-week fourth quarter and 52-week fiscal year that ended July 2, 2005 as compared to last year's 14-week fourth quarter and 53-week fiscal year ended July 3, 2004.
Fourth Quarter Highlights:
-- Diluted earnings per share were $0.44, or 2.3% above the
$0.43 earned in last year's 14-week fourth quarter.
-- Net earnings rose 1.5%, or $284.7 million vs. $280.6 million
in last year's 14-week fourth quarter.
-- Sales were $7.98 billion compared to $8.14 billion in last
year's 14-week fourth quarter. On a comparable basis, fourth
quarter sales of $7.98 billion compare to last year's
adjusted fourth quarter sales of $7.56 billion.(a)
-- Non-comparable acquisitions represented 1.0% of sales and
food cost inflation, as measured by SYSCO's change in cost of
goods, was 1.6%.
-- Operating expenses as a percent to sales were 13.55%, an
11 basis point reduction in comparison to 13.66% in the same
period last year.
Fiscal Year Highlights:
-- Diluted earnings per share were $1.47, a 7.3% increase over
last year's $1.37.
-- Net earnings increased 6.0% to $961.5 million vs.
$907.2 million in last year's 53-week fiscal year.
-- Fiscal year sales of $30.3 billion represents a 3.2% increase
compared to last year's $29.3 billion in sales. On a
comparable basis, fiscal year 2005 sales of $30.3 billion
were approximately 5.3% higher than adjusted sales of
$28.8 billion for last year.(a)
-- Non-comparable acquisitions represented 0.8% of sales and
food cost inflation, as measured by SYSCO's change in cost of
goods, was 3.5%.
-- Operating expenses as a percent to sales dropped 27 basis
points to 13.85% compared to last year's 14.12%.
(a) Because the fourth quarter of fiscal 2004 contained an
extra week, a comparable sales figure has been provided by
excluding 1/14th of the sales made during the final
quarter of fiscal 2004. Refer to the reconciliation that
appears after the cash flow statement for supplemental
information on adjusted sales performance.
Richard J. Schnieders, SYSCO's chairman, chief executive officer, and president, said, "SYSCO's dedicated associates generated sales and earnings gains for the 29th consecutive year, a truly remarkable accomplishment. After adjusting for the extra week in last year's fourth quarter, nominal sales growth has remained relatively stable for the past several quarters. In addition, declining inflation has lessened the overall gross margin pressures experienced in recent quarters and has spurred underlying unit growth. This has added to the growth coming from the success and maturation of our business review processes."
SYSCO's business review efforts enhance customer relationships by tailoring value-added products and services such as menu reengineering and customer loyalty programs. On a year-over-year basis, sales to those operators who have participated in business reviews increased at an average percentage rate in the mid-teens.
"We are pleased with the results for the quarter that were generated by our sales growth strategies," added Mr. Schnieders. "The continued expense reduction measures and distribution efficiencies at our companies were above internal projections and the companies overcame higher fuel costs in the quarter, which were 0.46 percent of sales compared to 0.33 percent of sales in last year's fourth quarter. Fourth quarter operating expenses as a percent of sales dropped 11 basis points and bad debt writeoffs net of recoveries for the year were a record low 0.07 percent of sales, a reflection of the strength of the restaurant industry and higher quality sales by our operating companies."
Mr. Schnieders added that SYSCO continued to invest for growth during the fourth quarter, with capital expenditures of $85.8 million during the final 13 weeks of fiscal 2005, or a total of $390.2 million during the fiscal year. The company projects capital spending to be in a range of $425 million to $450 million for fiscal year 2006.
During the fourth quarter, $16.9 million was expensed and $2.2 million was capitalized related to the National Supply Chain Project. Through the end of fiscal year 2005, the total amount expensed on the National Supply Chain Project since inception was $113 million and the total amount capitalized was $186 million.
"The National Supply Chain project, the largest strategic project in SYSCO's history, continues to exceed our expectations," added Mr. Schnieders. "The Northeast Redistribution Center (RDC) is currently shipping to 12 of the 14 broadline operating companies in that region, with the two remaining companies scheduled to ramp up by October. Approximately 120,000 cases are currently being shipped each day from the Northeast RDC, a figure that will grow to 300,000 cases when it is fully operational in January, 2006. We also have identified a site in Florida as the location for the second RDC and expect to make a formal announcement in the near future."
The acquisition of two specialty meat distributors -- Facciola Meat Company (Fremont, California) and Royalty Foods, Inc. (Orlando, Florida), were completed during the fourth quarter of fiscal 2005. The purchase of specialty produce distributor Fowler & Huntting Company, Inc. (Hartford, Connecticut), which was announced during the fourth quarter, was completed July 29, 2005. Construction of two fold-out operations to service the Raleigh, North Carolina and Gulf Coast Alabama markets continued to progress during the quarter, as did construction of a replacement facility in Lincoln, Illinois. A replacement facility for the Denver broadline company is currently under construction and during the fourth quarter facility expansions were completed in Baltimore, Maryland; San Diego, California; and Harrisburg, Virginia. A warehouse expansion was also performed in Modesto, California for Piranha Produce, SYSCO's recently acquired specialty produce distributor.
SYSCO's income tax provision in the fourth quarter of fiscal 2005 includes a tax benefit of $8.5 million primarily related to the reversal of valuation allowances previously recorded on certain deferred tax assets.
In the first quarter of fiscal 2006 SYSCO will begin expensing stock options as required under accounting guidelines. The current estimate of the impact for expensing options falls in a range of $0.11 to $0.13 per share for the fiscal year 2006.
SYSCO is the largest foodservice marketing and distribution organization in North America, providing food and related products and services to approximately 390,000 restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. SYSCO's operations are located throughout the United States and Canada and include broadline companies, specialty produce and custom-cut meat operations, Asian foodservice distributors, hotel supply operations and chain restaurant distribution subsidiaries. For more information about SYSCO visit the company's Internet home page at www.sysco.com. As previously announced, SYSCO's fourth quarter 2005 earnings conference call will be held at 10:00 a.m. EDT on Monday, August 15, 2005. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com under Investor Relations.
The SYSCO Corporation logo is available at: http://media.primezone.com/prs/single/?pkgid=747
Forward-Looking Statements
Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding capital expenditures; inflationary trends; the impact of option expensing; SYSCO's ability to increase sales, improve operating efficiencies, control expenses and execute growth strategies; and the expected timing and benefits of acquisitions, fold-outs, the national supply chain project and regional redistribution centers, including the Northeast RDC. These statements involve risks and uncertainties and are based on management's current expectations and estimates; actual results may differ materially. Those risks and uncertainties that could impact these statements include risks that pertain to SYSCO's business, including the risks relating to the foodservice distribution industry's relatively low profit margins and sensitivity to general economic conditions, including the current economic environment and consumer spending; SYSCO's leverage and debt risks; the successful completion of acquisitions and integration of acquired companies; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; construction schedules; management's allocation of capital and the timing of capital purchases such as fleet and equipment; competitive conditions; labor issues; and internal factors such as the ability to control expenses. The expected impact of option expensing is based on certain assumptions regarding the number and fair value of options granted, resulting tax benefits and shares outstanding. The actual impact of option expensing could vary significantly to the extent actual results vary significantly from assumptions. For a discussion of additional factors that could cause actual results to differ from those described in the forward-looking statements, see the Company's Annual Report on Form 10-K for the fiscal year ended July 3, 2004 as filed with the Securities and Exchange Commission.
SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 13-Week and
14-Week Periods Ended
---------------------------
July 2, 2005 July 3, 2004
----------- -----------
Sales $ 7,981,279 $ 8,139,017
Costs and expenses
Cost of sales 6,437,589 6,554,156
Operating expenses 1,081,376 1,111,548
Interest expense 19,384 19,136
Other, net (4,325) (2,080)
----------- -----------
Total costs and expenses 7,534,024 7,682,760
----------- -----------
Earnings before income taxes 447,255 456,257
Income taxes 162,575 175,659
----------- -----------
Net earnings $ 284,680 $ 280,598
=========== ===========
Basic earnings per share $ 0.45 $ 0.44
=========== ===========
Diluted earnings per share $ 0.44 $ 0.43
=========== ===========
Average shares outstanding 631,756,582 638,405,202
=========== ===========
Diluted average shares outstanding 647,875,858 657,838,265
=========== ===========
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Comparative segment sales data for the fourth quarter of fiscal
years 2005 and 2004 are summarized below.
(Unaudited) For the 13-Week and
($000) 14-Week Periods Ended
---------------------------
July 2, 2005 July 3, 2004
----------- -----------
Sales:
Broadline $ 6,289,177 $ 6,562,356
SYGMA 1,076,212 987,247
Other 711,052 675,958
Intersegment (95,162) (86,544)
----------- -----------
Total $ 7,981,279 $ 8,139,017
=========== ===========
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SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 52-Week and
53-Week Periods Ended
---------------------------
July 2, 2005 July 3, 2004
----------- -----------
Sales $30,281,914 $29,335,403
Costs and expenses
Cost of sales 24,498,200 23,661,514
Operating expenses 4,194,184 4,141,230
Interest expense 75,000 69,880
Other, net (10,906) (12,365)
----------- -----------
Total costs and expenses 28,756,478 27,860,259
----------- -----------
Earnings before income taxes 1,525,436 1,475,144
Income taxes 563,979 567,930
----------- -----------
Net earnings $ 961,457 $ 907,214
=========== ===========
Basic earnings per share $ 1.51 $ 1.41
=========== ===========
Diluted earnings per share $ 1.47 $ 1.37
=========== ===========
Average shares outstanding 636,068,266 642,688,614
=========== ===========
Diluted average shares outstanding 653,157,117 661,919,234
=========== ===========
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Comparative segment sales data for the 52-weeks of fiscal year 2005
and the 53-weeks of fiscal year 2004 are summarized below.
(Unaudited) For the 52-Week and
($000) 53-Week Periods Ended
---------------------------
July 2, 2005 July 3, 2004
----------- -----------
Sales:
Broadline $24,128,143 $23,718,955
SYGMA 3,916,255 3,548,693
Other 2,578,923 2,383,692
Intersegment (341,407) (315,937)
----------- -----------
Total $30,281,914 $29,335,403
=========== ===========
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
July 2, 2005 July 3, 2004
----------- -----------
ASSETS
Current assets
Cash $ 191,678 $ 199,706
Receivables 2,284,033 2,189,127
Inventories 1,466,161 1,404,410
Prepaid expenses 59,914 54,903
Prepaid income taxes -- 3,265
----------- -----------
Total current assets 4,001,786 3,851,411
Plant and equipment at cost,
less depreciation 2,268,301 2,166,809
Other assets
Goodwill and intangibles 1,284,459 1,218,700
Restricted cash 101,731 169,326
Prepaid pension cost 389,766 243,996
Other 221,859 197,390
----------- -----------
Total other assets 1,997,815 1,829,412
----------- -----------
Total assets $ 8,267,902 $ 7,847,632
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 63,998 $ 73,834
Accounts payable 1,795,824 1,742,578
Accrued expenses 742,282 724,970
Accrued income taxes 10,195 --
Deferred taxes 434,338 422,419
Current maturities of long-term debt 410,933 162,833
----------- -----------
Total current liabilities 3,457,570 3,126,634
Other liabilities
Long-term debt 956,177 1,231,493
Deferred taxes 724,929 686,705
Other long-term liabilities 370,387 238,294
----------- -----------
Total other liabilities 2,051,493 2,156,492
Contingencies
Shareholders' equity
Preferred stock -- --
Common stock, par $l per share 765,175 765,175
Paid-in capital 389,053 332,041
Retained earnings 4,552,379 3,959,714
Other comprehensive income (13,677) 17,640
Treasury stock (2,934,091) (2,510,064)
----------- -----------
Total shareholders' equity 2,758,839 2,564,506
----------- -----------
Total liabilities and shareholders'
equity $ 8,267,902 $ 7,847,632
=========== ===========
SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
For the 52-Week and
53-Week Periods Ended
---------------------------
July 2, 2005 July 3, 2004
----------- -----------
Cash flows from operating activities:
Net earnings $ 961,457 $ 907,214
Add non-cash items:
Depreciation and amortization 316,743 283,595
Deferred tax provision 554,850 608,152
Provision for losses on receivables 18,587 27,377
Additional investment in certain
assets and liabilities, net of
effect of businesses acquired:
(Increase) in receivables (72,829) (177,058)
(Increase) in inventories (35,014) (162,502)
(Increase) in prepaid expenses (4,058) (2,183)
Increase in accounts payable 28,080 95,874
(Decrease) increase in accrued
expenses (32,674) 61,544
(Decrease) in accrued income taxes (438,779) (392,197)
(Increase) in other assets (18,185) (25,238)
(Decrease) in other long-term
liabilities and prepaid pension
cost, net (86,338) (35,056)
----------- -----------
Net cash provided by operating
activities 1,191,840 1,189,522
----------- -----------
Cash flows from investing activities:
Additions to plant and equipment (390,203) (530,086)
Proceeds from sales of plant and
equipment 25,482 15,851
Acquisition of businesses, net of
cash acquired (115,637) (79,247)
Decrease (increase) in restricted
cash balances 66,918 (90,329)
----------- -----------
Net cash used for investing
activities (413,440) (683,811)
----------- -----------
Cash flows from financing activities:
Bank and commercial paper
(repayments) (9,836) (77,849)
Other debt (repayments) borrowings (32,796) 185,087
Cash from termination of interest
rate swap 5,316 1,305
Common stock reissued from treasury 208,004 167,652
Treasury stock purchases (597,660) (608,506)
Dividends paid (357,298) (309,540)
----------- -----------
Net cash used for financing
activities (784,270) (641,851)
----------- -----------
Effect of exchange rate changes
on cash (2,158) (1,601)
----------- -----------
Net decrease in cash (8,028) (137,741)
Cash at beginning of period 199,706 337,447
----------- -----------
Cash at end of period $ 191,678 $ 199,706
=========== ===========
Cash paid during the period for:
Interest $ 73,939 $ 68,481
Income taxes 473,970 344,414
Comparative Supplemental Statistical Information Related to Sales
(Unaudited)
-----------------------------------------------------------------
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales
data for the 13-weeks and 14-weeks of the fourth quarter of fiscal
years 2005 and 2004 are summarized below.
For the 13-Week and
14-Week Periods Ended
----------------------------
July 2, 2005 July 3, 2004
------------ ------------
SYSCO Brand Sales as a % of MA-Served
Sales 56.8% 58.0%
SYSCO Brand Sales as a % of Total
Traditional Broadline Sales in the U.S. 49.2% 50.1%
MA-Served Sales as a % of Total
Traditional Broadline Sales in the U.S. 55.1% 54.5%
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Comparative SYSCO Brand Sales and Marketing Associate-Served Sales
data for the 52-weeks and 53-weeks of fiscal years 2005 and 2004 is
summarized below.
For the 52-Week and
53-Week Periods Ended
----------------------------
July 2, 2005 July 3, 2004
------------ ------------
SYSCO Brand Sales as a % of MA-Served
Sales 57.2% 57.6%
SYSCO Brand Sales as a % of Total
Traditional Broadline Sales in the U.S. 49.4% 49.5%
MA-Served Sales as a % of Total Traditional
Broadline Sales in the U.S. 53.8% 53.5%
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Because the fourth quarter of fiscal 2004 contained an additional week
as compared to fiscal 2005, sales levels for fiscal 2005 are not
directly comparable to the prior fiscal year. In order to provide a
more comparable picture of sales during fiscal 2005 relative to fiscal
2004, management believes that it is appropriate to adjust the sales
figures for fiscal 2004 by estimating the impact of the additional
week. As a result, sales for the fiscal 2004 periods presented below
are reduced by one-fourteenth of total sales for the fourth quarter.
Failure to make these adjustments might cause investors to understate
the amount of actual sales change due to the additional week of sales
included in the 2004 periods. Set forth below is a reconciliation of
the actual year-over-year sales increase (decrease) to adjusted
year-over-year sales increase:
Comparative fourth quarter fiscal 2005 and 2004 sales for a 13-week
vs. adjusted 13-week comparison.
(In thousands) For the 13-Week and
13-Week Periods Ended
----------------------------
July 2, 2005 July 3, 2004
------------ ------------
Sales $ 7,981,279 $ 8,139,017
Less 1 week average sales n/a (581,358)
------------ ------------
Comparable 13-week vs. 13-week sales $ 7,981,279 $ 7,557,659
============ ============
Actual year-over-year percentage
decrease (1.9%)
Adjusted year-over-year percentage
increase 5.6%
Comparative fiscal 2005 and 2004 sales for a 52-week vs. adjusted
52-week comparison.
(In thousands) For the 52-Week and
52-Week Periods Ended
----------------------------
July 2, 2005 July 3, 2004
------------ ------------
Sales $30,281,914 $29,335,403
Less 1 week average sales in fourth
quarter fiscal 2004 n/a (581,358)
------------ ------------
Comparable 52-week vs. 52-week sales $30,281,914 $28,754,045
============ ============
Actual year-over-year percentage
increase 3.2%
Adjusted year-over-year percentage
increase 5.3%